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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of DaVita HealthCare Partners Inc was -0.76. The lowest was -3.51. And the median was -2.56.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of DaVita HealthCare Partners Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0261||+||0.528 * 1.0011||+||0.404 * 0.9781||+||0.892 * 1.0793||+||0.115 * 1.0585|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0512||+||4.679 * -0.0518||-||0.327 * 1.0247|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,855 Mil.|
Revenue was 3581.136 + 3533.589 + 3525.665 + 3434.618 = $14,075 Mil.
Gross Profit was 998.803 + 1018.458 + 1024.65 + 988.542 = $4,030 Mil.
Total Current Assets was $4,200 Mil.
Total Assets was $18,514 Mil.
Property, Plant and Equipment(Net PPE) was $2,911 Mil.
Depreciation, Depletion and Amortization(DDA) was $654 Mil.
Selling, General & Admin. Expense(SGA) was $1,497 Mil.
Total Current Liabilities was $2,444 Mil.
Long-Term Debt was $8,980 Mil.
Net Income was 97.434 + -6 + 215.872 + 170.477 = $478 Mil.
Non Operating Income was 2.976 + 4.631 + 2.484 + -150.009 = $-140 Mil.
Cash Flow from Operations was 429.002 + 436.673 + 678.996 + 31.442 = $1,576 Mil.
|Accounts Receivable was $1,675 Mil.
Revenue was 3287.965 + 3328.017 + 3251.824 + 3172.489 = $13,040 Mil.
Gross Profit was 925.353 + 961.556 + 925.29 + 925.951 = $3,738 Mil.
Total Current Assets was $4,301 Mil.
Total Assets was $18,367 Mil.
Property, Plant and Equipment(Net PPE) was $2,501 Mil.
Depreciation, Depletion and Amortization(DDA) was $602 Mil.
Selling, General & Admin. Expense(SGA) was $1,319 Mil.
Total Current Liabilities was $2,680 Mil.
Long-Term Debt was $8,380 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1855.285 / 14075.008)||/||(1675.182 / 13040.295)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(3738.15 / 13040.295)||/||(4030.453 / 14075.008)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (4199.56 + 2911.205) / 18514.198)||/||(1 - (4300.795 + 2500.596) / 18366.663)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(602.159 / (602.159 + 2500.596))||/||(653.59 / (653.59 + 2911.205))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1496.763 / 14075.008)||/||(1319.246 / 13040.295)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((8979.855 + 2443.618) / 18514.198)||/||((8380.153 + 2679.516) / 18366.663)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(477.783 - -139.918||-||1576.113)||/||18514.198|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
DaVita HealthCare Partners Inc has a M-score of -2.65 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
DaVita HealthCare Partners Inc Annual Data
DaVita HealthCare Partners Inc Quarterly Data